Broadband price cuts ahead

A broadband price war is set to break out after BT was ordered to slash the prices it charges rivals to use its network.

From December, BT's rivals will pay 68 per cent less for one-off charges to use its lines while their monthly bills will fall 76 per cent. The changes should trigger new competitors into the UK offering wholesale broadband access.

The price cuts are part of what is known as "unbundling" the local loops, the last mile of copper wire connections from BT's local exchanges to millions of households. The ruling could not come at a worse time for BT and a better time for consumers, days after French-owned Wanadoo announced it was undercutting super-fast connections by 40 per cent.

Wanadoo, a unit of France Telecom, is offering its one-megabyte service for ?17.99 a month compared with ?29.99 for a similar connection from BT.

Thousands of households have benefited from a price war in the past year with ISP's such as AOL and Tiscali fighting BT for new broadband customers.